Packaging is closely linked to advertising but it is far more focused than advertising because it presents the product to the consumer daily in the home product, foil packed for freshness.and on the retail shelf. Merchandising displays that present the pack design in an attractive or interesting way and media advertising consistent with the responsible for the merchandising operation. A key to promotional activities is through effective use of packaging and there exist many kinds of on-pack promotions such as free extra product, money-off, special edition, new improved product, foil packed for freshness.
Bar code scanning information linked to the use of retailers’ loyalty card schemes has made a big impact on buying and marketing decision-making by retailers. Their task is to make better use of this information on consumer behaviour for promotional purposes and to build store brand loyalty. Retailers can also use this information to evaluate the effectiveness of new pack designs, on-pack promotions and the sales appeal of new products.
The role of packaging in multiple retail logistics. There are tight constraints on physical distribution and in-store merchandising. The retailer is receptive to packaging that reduces operating costs, increases inventory turnover, trans forms to attractive merchandising displays – such as pre-assembled or easy to-assemble aisle displays – and satisfies logistics service levels (reliability, responsiveness and product availability). For example, combined transit and point-of-sale packaging saves store labour through faster shelf loading, provides ease of access to product thereby obviating the need to use potentially dangerous unsafe cutting tools, and presents an opportunity for source reduction.
The total distribution cost affects the total volume of demand through its influence on price (McKinnon, 1989). For some fast-moving commodity type products, such as pasteurised milk, the cost of distribution and retail merchandising is usually a sizeable proportion of total product cost representing up to 50 per cent or more of the sales price. The cost of packaging materials and containers also adds slightly to the cost but design of the optimal packaging system can significantly reduce cost in the retail distribution chain. The development of global food supply chains has meant that many points of production have located further away from the points of consump tion, often resulting in higher distribution cost.
Controlling distribution cost through improved operational efficiency in the supply chain is a key to competitive advantage for a retailer. The retailer must maximise operational efficiency in the distribution channel (West, 1989). The goal of distribution is to deliver the requisite level of service to customers at the least cost. The identification of the most cost-effective logistical packaging is becoming more crucial. Cost areas in distribution include storage, inventory, transport, administration and packaging. Storage, inventory, transport and store labour are major cost areas for the retailer while transport, storage and packaging are the main cost areas for the food manufacturer.
The efficiency of the multiple retail food supply chain relies on close communication between retailers, food manufacturers and packaging suppliers. It also relies on accurate order forecasting of likely demand. Massive investment in information technology has enabled closer integration of the supply chain and, through electronic data interchange (EDI), has ensured that stock moves to stores on a just-in-time (JIT) basis, and is sold well before the expiry date. The bar code is a code that allows the industry-wide identification of retail product units by means of a unique reference number, the major application being the electronic point of sale (EPoS) system at the retail checkout. The use of the bar code for identification of primary, secondary and tertiary packaging has enabled efficient distribution management and stock control.
Packaging is a means of ensuring the safe delivery of a product to the consumer at the right time in sound condition at optimum cost. The need for safe delivery of products at the right time and optimum cost demands costeffective protective packaging that facilitates high logistics performance. The objective is to arrive at the optimum protection level that will meet the customer’s service requirements at minimal expense. Most organisations build in an expected damage rate, which may be as high as 10% or more for inexpensive and readily replaceable items. Other issues that concern the distributor and store manager are cleanliness and hygiene. The retailer’s challenge is to make the most profitable use of shelf space. There is a need to maintain availability of a wide range of high turnover
goods on the retail shelf with good shelf life or freshness. This often conflicts with the requirement to minimise product inventory in the retail distribution channel. Consequently, effective supply chain management and a well-integrated food packaging chain are necessary. For packaging material suppliers and converters, the implications of an increasing range of products, often involving shorter runs and lead times, are higher stock-holding of materials at extra cost, more frequent deliveries or developing just-in-time (JIT) techniques. A key to competitive edge for a product manufacturer may depend on how quickly and effectively it responds to the retailer’s need for:
• minimal stockholding
• high product turnover
• optimal level of fill on shelf
• efficient handling practice
• product integrity.
Increasingly, the manufacturer’s packaging line must respond rapidly to promotional needs and shorter order lead times while ensuring minimal downtime. Packaging systems may need to be not only reliable but also flexible, to change the shape, volume, design and message with relative ease. Flexibility is equally important when there is regional marketing need, sudden seasonal demand or where there has been product failure in the marketplace. Modular or standardised packaging systems enhance the logistical value of products. Modular systems allow pallets, roll containers and transport containers to be better utilised and enable packs to be bundled in trays and outer cases to fit upermarket shelves more efficiently. Outer packaging is being minimised for the direct transfer of the product from lorry to shelf display. The consequent requirement for increased quality of primary packaging presents innovation opportunities.
Food packaging and the shelf life issue can be strategically important in logistics because of the new distribution channels it can open up and their impact on industry structure. Any process that can extend shelf life – even by only one or two days – can bring about effective rationalisation in distribution and finished goods stock levels. Retailers are striving to adopt packaging systems that integrate the requirements of improved environmental performance along with marketing and operational efficiency. Examples include the use of returnable plastic trays, refillable packs and the collection for recycling of corrugated cases with increased recycled fibre content. The significant moves towards centralised warehouses controlled by retailers, temperature-controlled delivery systems and just-in-time manufacture/delivery, all contribute to the potential for reducing the amount of packaging used. Table 1.17 lists some packaging characteristics valued in multiple retail logistics and distribution.
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International Plastic Engineering Co., Ltd
Add: Changle Industrial Zone, Haimen City, Jiangsu Province 226124, China
Contact: Michelle Fan